Ohio Issue 5 (2008)

From Ballotpedia

(Redirected from Ohio Payday Loan Referendum (2008))

1 2008 election results
2 Supporters of repealing HB 545
- 2.1 Arguments for a "no" vote
- 2.2 Donors to the "no" side
3 Opposition to repeal of HB 545
- 3.1 Arguments for a "yes" vote
- 3.2 Newspaper endorsements for a "yes" vote
4 Ballot language
5 Path to the ballot
6 Lawsuit over ballot title
- 6.1 A Victory
- 6.2 Secretary of State under fire
7 Payday lending in other states
8 External links
9 References
10 Additional reading

Ohio Issue #5 is a referendum on the November 4, 2008 ballot in Ohio. The question it asks voters is whether they want to approve Section 3 of Ohio House Bill 545 that caps the Ohio payday loan industry's interest rate at 28%. The interest rate cap prior to the passage of HB 545 was 391% ($15 per $100 on a two-week loan).

This measure was approved at the polls on November 4. See 2008 ballot measure election results.

2008 election results

These election results are based on Cleveland Today as of Nov. 6, 2008.^[1]

Issue 5
Yes or no	Votes	Percentage
Yes	3,159,002	63%
No	1,830,132	37%
Total votes	4,989,134	100%

HB 545 was approved by state lawmakers and the governor in late spring. Opponents of the new restrictions (mostly the payday lending industry) quickly sprang into action to try to overturn it using Ohio's veto referendum process.

Opponents of HB 545 are asking, via the referendum they put on the ballot, for a partial repeal of House Bill 545--the portion that eliminates the current payday interest rates.

The payday lending industry is an $85 billion industry that provides short-term loans, which are usually secured with a check postdated to the borrower's next payday. The interest rate in the absence of regulation has typically worked out to an average of $15 per $100 borrowed on a two-week loan. The high interest rates are what has led to legislative attempts to cap those rates. In fifteen states, the practice is now illegal.^[2]

A "yes" vote on Issue 5 means the voter wants tighter regulations on payday lenders.
A "no" vote means the voter wants payday loan stores in the state to operate as they do currently.^[3]

Supporters of repealing HB 545

Reject House Bill 545 and Ohioans for Financial Freedom are the names of groups supporting repeal of HB 545; these groups are mostly composed of those in the payday loan business. These two organizations and numerous others that are not associated with the payday lending industry (below) urge a no vote on Issue 5.

A letter from one payday loan operator to the people of Ohio surfaced quickly after the interest rate cap was passed to give people a different view of an industry that by some is considered cruel and seen as taking advantage of their customers:

"Some [customers] are shocked, some are mad and some are upset because not only do they depend on us, but they also have formed a great friendship with my employees and me. Oh, yes, did I also mention that I recently gave money to three individuals, out of my pocket, because they needed a little to hold them over until payday? Yes, we payday lenders really do such things. My customers will have nowhere to go unless our legislators are going to make these short-term loans."^[4]

Organizations That Support Repealing HB 545 include: A more up to date list can be found at http://ohioans4financialfreedom.com/endorsements/ A partial list:

Call & Post, Ohio’s Largest African American Newspaper
CORE (Congress of Racial Equality)
C.O.A.S.T.(Coalition Opposed to Additional Spending and Taxes)
The Ohio Chamber of Commerce
The Ohio Grocers’ Association
The Ohio Christian Alliance
The National Taxpayers Union (NTU)

Arguments for a "no" vote

Notable arguments that have been made against HB 545 include:

Issue #5 asks voters to approve a law that effectively puts payday lending services and their employees out of business in Ohio by making it unprofitable to offer these loans. If payday loans are driven out of existence, there could be additional political pressure to boost government assistance programs when Ohioans can no longer help themselves because the most common - and often only – method to help cover unplanned expenses has been eliminated.
It limits a particular consumer loan option to four transactions per annum.
It creates a state-wide database of loan transactions, including recipient name, address, and the amount of all small, short-term loans taken out.
The opposition to 545 is also supported by the organization C.O.A.S.T.(Coalition Opposed to Additional Spending and Taxes) C.O.A.S.T states, "This weird law takes state government to a new level of creepy interference with our lives." When a borrower makes two such transactions in 90 days, they are forced into state-mandated education program imposing value perspectives of the government. The consumer must then pay $250 for the privilege of submitting to that state re-education program.
The Ohio Chamber of Commence says the new law, House Bill 545, imposes overly broad regulations that are "not the way to revitalize Ohio’s economy." "This new law, if not reined in by Ohio voters, will drive an entire industry and 6,000 good-paying jobs out of our state." "As we strive to turn around our economy we must allow the free market to meet consumer demands and facilitate the creation of much needed jobs".
The Ohio Grocer's Association says, "If payday lending businesses cease to exist in Ohio, which is likely if H.B. 545 is enacted, OGA’s members could be hurt through an increased number of bounced checks, fraudulent checks and even theft."
The National Taxpayers Union comments "If payday loans are driven out of existence, there could be additional political pressure to boost government assistance programs when Ohioans can no longer help themselves because the most common – and often only – method to help cover unplanned expenses has been eliminated."
Niger Innis, the National Spokesperson, for CORE (Congress of Racial Equality) told the Ohio Senate Committee that he found it difficult to accept that a single mother would be banned from getting a payday loan for gasoline, but it was acceptable for that same mother to gamble $200 at a new Ohio Casino. Mr. Innis also spoke about the increase of illegal loan shark activity, in Georgia, since the payday loans were banned in the state.

Donors to the "no" side

Through October 15, $15.1 million had been donated to urge defeat of Issue 5.^[5]

As the campaign nears it end, financial newspapers are reporting that Advance America, one of the payday lenders that would be affected by the measure, stands to lose $42 milllion if forced to close its centers in Ohio.^[6]

Opposition to repeal of HB 545

Those urging a yes vote on Issue 5 (to retain HB 545) include Rep. Christopher R. Widener, R-Springfield, the Ohio Association of Community Action Agencies, Michael Coleman (mayor of Columbus) and the Ohio Association of Second Harvest Foodbanks.^[7]

Arguments for a "yes" vote

Rep. Christopher R. Widener, R-Springfield supports HB 545, saying "I designed House Bill 545 to protect Ohioans from a dangerous product that has been sold at an egregious price. Sadly, the REJECT House Bill 545 Committee would prefer to prey on Ohio consumers than agree to the terms of the new legislation."^[8]
It caps the interest rate at 28%.
It helps break the cycle of debt.
It gives borrowers more time to pay back loans.
It does not mean an end to 6,000 jobs.^[9]

Newspaper endorsements for a "yes" vote

The Akron Beacon Journal is in favor of a yes vote, saying, "It will ensure that borrowers don't fall victim to the slick business model that is payday lending — dependent on repeated borrowing, one loan leading to another to pay off the previous one. Vote yes on Issue 5."^[10]

Ballot language

Due to winning a recent battle over the ballot language (see "A Victory" below), the referendum that will be presented to voters on the November ballot will contain no mention of a 391 percent interest rate. Instead, it will tell voters that if they reject a portion of the law restricting the industry, payday lenders would be able to charge rates and fees that "substantially exceed" a 28 percent annual rate. The 28 percent is the cap placed in the law approved this year by the Legislature. ^[11]

Path to the ballot

After a long and meandering path to the ballot, Ohio Issue 5 was formally certified for the Ohio ballot on October 23. Proponents needed 241,365 signatures on the measure to qualify it for the ballot; the initial turn-in date for the signatures was September 1, 2008. Ohio allows more time if the initial signatures turned in are found to be insufficient; this turned out to be necessary for Issue 5.

422,000 signatures submitted in August

On August 31, proponents turned in 422,000 signatures.^[12]

After problems with some of the signatures were identified, Ohio Secretary of State Jennifer Brunner held a hearing to determine whether the payday lending referendum should be kept off of the Nov. 4 ballot due to alleged illegal practices by a company hired to gather signatures for the measure. More details below in the legal battles section.

Signature shortfall

Payday lenders turned in about 422,000 signatures and need 241,365, which means they needed about a 57 percent validity rate to qualify for the ballot. Ohio's largest counties reported to state elections officials rates of validity on payday lending petitions ranging from a meager 38 percent in Montgomery County to 58 percent in Mahoning County. In Cuyahoga County, election officials said just under 50 percent of the signatures were valid.^[13]

Signatures thrown out

About 13,000 signatures collected by California-based Arno Political Consultants on behalf of payday lenders will be tossed out, because the company’s supervisors failed to file the proper paperwork.

The tossed names, in addition to an already high invalidation rate of signatures collected by other companies, including the Ohio Petition Company, means the payday lenders referendum effort is expected to initially fall short of the 241,366 names needed to qualify for the November ballot.

Circulators are currently using the 10-day window to gatherthe additional signatures they will need to still qualify the measure.^[14],^[15],^[16]

Lawsuit over ballot title

The original ballot language was rejected by Ohio Attorney General Nancy H. Rogers. ^[17] The proponents then won a lawsuit against state officials over the language^[18]

A Victory

Payday lenders won an argument with the Ohio Ballot Board that they couldn't win with the Legislature — that payday loans shouldn't be described using the high annual percentage rate that has come to define the industry.

The panel that decides how ballot issues are worded agreed it would be misleading to tell voters that payday lenders would be able to charge rates and fees equivalent to 391 percent annually if part of a new law is repealed. The omission of the high annual rate, which the federal government recognizes, was a significant victory for payday lenders in their ongoing attempt to fight the enactment of one of the strictest payday lender laws in the nation.^[11]

Secretary of State under fire

Secretary of State Jennifer Brunner has recently been accused of siding with the payday lenders by allowing them to have the ballot language they wanted.

Ohio newspaper The Plain Dealer reports on their editorial page that Brunner said Ohio law obliges her to play things down the middle, and that Issue 5's ballot language includes words the payday lenders don't like. She added that she wanted to avoid a court fight over wording that could derail election preparations.^[19]

Payday lending in other states

Proposition 200, a measure to allow payday lending to continue in Arizona, is on that state's November ballot. In Ohio and Arizona together, the payday-lending branches outnumber Starbucks and McDonald's outlets combined.^[2]

External links

References

Additional reading

Additional information about ballot litigation in 2008

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Categories: 2008 ballot access litigation | Ohio 2008 ballot measures | Business regulation, Ohio